I attended the Government-Business Forum on Small Business Capital Formation held at the US Securities and Exchange Commission on November 19th.
According to the SEC, one of the Forum's goals "is to .. highlight perceived unnecessary impediments to small business capital formation and address whether they can be eliminated or reduced. Each forum seeks to develop recommendations for government and private action to improve the environment for small business capital formation, consistent with other public policy goals, including investor protection. Participants in the Forum typically have included small business executives, venture capitalists, government officials, trade association representatives, lawyers, accountants, academics and small business advocates..the format of the Forum typically has emphasized small interactive breakout groups developing recommendations for governmental action."
Participants at the sessions I attended consisted mainly of lawyers, with the occasional right wing lobbying group (Heritage Foundation) thrown in to make sure the interests of low and middle income citizens went unrepresented.
I am not exaggerating. At one point in a breakout session to develop recommendations concerning crowdfunding under Title III and Title IV of theJobs Act, a collection of lawyers forwarded a proposal to let foreigners use crowdfunding in support of EB-5 visas. The EB-5 visa "provides a method of obtaining a green card for foreign nationals who invest money in the United States."
While I have nothing against foreigners who want to invest in the US, during the session I noted that Title VII of the JOBS Act seeks to provide opportunities for veterans, women and minorities, and that the SEC may want to consider this first, since it is, you know, the law. Title VII says "The Securities and Exchange Commission shall provide online information and conduct outreach to inform small and medium sized businesses, women owned businesses, veteran owned businesses, and minority owned businesses of the changes made by this Act."
The JOBS Act actually restricts foreign use of domestic crowdfunding, a good thing in that it lowers fraud and gives native US Citizens a chance to benefit from American crowdfunding first.
Unfortunately, the lawyers in the room were having none of it. Aided by a feckless SEC staff person and a moderator who was himself a lawyer (not a small business person) proposals to reinforce the SEC's commitment to veterans, women and minorities were voted down, in favor of a recommendation giving foreigners the right to use domestic JOBS Act crowdfunding in support of the EB-5 visa program.